Get The Right Investment Mix
Retirement Planning Mistakes
The Unbeatable Roth IRA
How To Fund Your IRA

Get The Right Investment Mix
Use these simple rules of thumb to determine what percentage of your portfolio should be in stocks:

To be conservative: Subtract your age from 100.

To be moderate in your investing: Subtract your age from 110.

To be aggressive: Figure 120 less your age.
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Retirement Planning Mistakes
Avoid these common retirement planning mistakes and have the retirement you want — and deserve:

• Ignoring what you'll need. To continue your lifestyle, you must save — for many years. The average, healthy 65 year old likely will live to be 85. That's a long time without a salary.
• Waiting until tomorrow. Every year you wait is wasted. Save $100 a month starting at age 30 — and you'll accumulate nearly three times more than if you wait until age 45 (assuming a five percent after-tax return), most of it from compounding.
• Limiting 401(k) contributions. Like IRAs, 401(k)s are tax-deferred. So your money grows faster than with taxable savings. Contribute the maximum. Also match any funds put in by your employer. But always diversity your investments.
• Being too conservative with investments. The further you are from retirement, the more risk you can take. If a long-term investor, put 40 percent of your portfolio in stocks and mutual funds, 40 percent in fixed-income investments like certificates and bonds, and 20 percent in cash. As you near retirement, you can scale back. But even in retirement, have some stocks and mutual funds.
• Failing to diversify. Maintain a mix of stocks, bonds and cash. Also, supplement your employer plan with other portfolios. You'll maximize earnings and protect against losses.
• Underestimating the impact of inflation. It erodes your savings now. It also will in retirement. Even a modest 3 percent inflation rate doubles prices about every 24 years. At 5 percent, every 15 years!
• Relying too much on social security. It will pay less than half your income. The rest is up to you — and your investments.
• Overreacting to the stock market. Many investors sell when the market drops and buy when it jumps up. Usually that means you've reacted too late — and are buying or selling at exactly the wrong time. With the market, think long term.

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The Unbeatable Roth IRA
For savings, you can't beat the Roth IRA. Here's why you should consider opening one today - at People's Community Credit Union:

Your money grows tax-sheltered. So it grows much faster than regular savings. Here, your IRA also is insured up to $250,000. IRAs offered by mutual fund and brokerage firms usually aren't insured.

You can contribute up to $5,000 a year. An extra $1,000 if you're 50 or older. Although you can't deduct the contribution, you do build a tax-free retirement fund.

You can use payroll deduction. You can easily contribute by using payroll deduction or by converting regular savings into tax-sheltered Roth IRA savings.

Unlike with a traditional IRA, you avoid paying taxes when you withdraw funds from a Roth IRA. There's also no obligation to start withdrawing by age 70 1/2.

A Roth IRA may be one of your smart moves. Consult your tax advisor, then call us!
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How To Fund Your IRA
Here's how to make sure you have the retirement you want:

Save what you can. If you can't invest the full $5,000 a year, invest less. Just do it regularly. Payroll deduction or automatic transfers make it easy. Perhaps you have $200 to put away now. Open an account with that amount - then add to it every month. For retirement, every dollar counts - and interest continues to compound.

Invest your tax refund. The average refund now is $2,300. Use it to fund an IRA. File your tax return early, get the money back - and then include an IRA deduction when you file. (Remember: Most taxpayers still can deduct contributions. Consult your tax advisor.)

Convert loan payments. Once you've paid off a loan, turn payments into IRA savings. A former $333-a-month car loan will yield $4,000 in 12 months - plus interest. Best of all, you are already used to living without that money.

Change a habit. It's worth the effort to give up occasional restaurant meals, stop smoking - or refinance high-priced debt. A healthy IRA creates a good tax shelter now and a happy, prosperous retirement later.
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